The New Widow Maker

Move over Nat Gas.  You have a rival now.  For the title of widow maker.  Gold.  On Friday, we had a huge rip higher on QE3 hopes on the bad jobs number.  And then a key reversal day Wednesday and a crash lower yesterday on dashed QE3 hopes and the unwinding of the fear trade.  Gold needs an inflationary environment/weak dollar to maintain a long term uptrend.  We had that up to 2011 before China hit the wall and Europe entered into a deep recession.  It is now a disinflationary environment.  Sure, gold can have brief sharp rallies based on fear, but those kind of rallies don't last for long.  You need inflation, not fear to have a strong sustainable gold rally.  I like gold in the long term over the next 2 to 3 years, but that is a long time away.  I can't be bullish on gold here until we see China bottom out and the ES go much lower.  Both events are likely several months away.

 Just watching for now, the S&P could go either way.